Given our longer life expectancies, rising costs of living and the recent property boom, more and more retirees are finding themselves asset rich and cash poor. There are some options for retirees or people over 60 years of age.
The first option is to downsize. This has disadvantages as there are costs associated with selling the house, purchasing a new home and additional associated costs. Estimate costs could be as high as $100,000 which is a huge loss of your capital unless the move is a necessity. As a result, many retirees take the view that they are better offbattling along with their present house and the on-going bills and maintenance costs that come with it.
The second option is to seek a Reverse Mortgage.
Virtually all of the major banks have opted out of this lending product largely due to changes to their lending policies and in view of the negative publicity received from the Royal Commission. There are now a limited number of lending institutions that have a financial solution for retirees.
A reverse mortgage involve substantial decisions. However, once all the pros and cons are considered, a reverse mortgage is a viable option for some retirees. Also, many retirees and pensioners wish to reside in their own property for as long as possible (this is also the federal government’s preference) instead of entering Aged Care. This type of loan would assist with living costs, payment for allied services and other unforeseen expenses. Some of the lenders products allow for Lump Sums and periodic payments to assist with daily living costs.
If retirees/pensioners are pondering Aged Care, they should carefully consider the financial implications and seek professional advice of a Certified Financial Planner that specialises in Aged Care to guide them through the labyrinth of paperwork and entitlements.
Paul is accredited with proven and experienced Reverse Mortgage lenders who offer a variety of options to suit borrower’s requirements. Please do not hesitate to contact us today to discuss your particular needs.